When Johnny Palm heard that developers wanted to turn a former hotel into a shelter for asylum-seekers, many likely Muslims from the Middle East, he immediately added his name to a protest list.

“The village can’t handle it,” the 42-year-old plumber said, crossing his tattooed arms. “Why don’t they go to Saudi Arabia instead where they share the same religion and speak the same language?”

Sweden has granted asylum to nearly 50,000 people since the start of the year, taking in more refugees per capita than any other European country. Even as the European Union argues over how to handle the biggest influx since World War II, Social Democrat Prime Minister Stefan Lofven has vowed to keep Sweden’s doors open. “My Europe doesn’t build walls,” he said at a recent rally in Stockholm.

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The anti-immigration Sweden Democrats–long a fringe movement with neo-Nazi roots–has become the country’s third-largest political force. Recent surveys show about 20% of Swedes now support the party, up from 13% in last year’s general election and less than 6% in 2010.

In Norway and Finland, populist parties have joined ruling coalitions. In Denmark, Prime Minister Lars Lokke Rasmussen governs with support from the anti-immigration People’s Party, which agreed to back him only after he promised to tighten borders.

In Sweden, anti-immigrant sentiment is heard loudly in small towns and rural areas, where many of the homes for new arrivals awaiting a decision on their asylum application are set up. This summer, several shelters were targeted in arson attacks, including with Molotov cocktails. No arrests have been made.

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Mr. Lofven is facing local resistance to his plan for all municipalities to share the load. Some mayors from his own party have started to question the open-arms policy.

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In Vollsjo, a village of 900 people that gave its name to the soft-leather Vollsjo clogs, plans to convert the Hotel Svea (short for Sweden) into a shelter sparked a petition drive against it, punctuated by xenophobic diatribes online.

Such opposition isn’t new: In 1988, after thousands of refugees fled the Iran-Iraq war to Sweden, two-thirds of voters in Sjobo, the broader municipality that includes Vollsjo, voted against accepting any.

Still, in 2001 the municipality, with 18,000 residents, sidestepped the non-binding vote and agreed to accept 25 refugees a year. In addition, Sjobo has opened two shelters since 2014 to house around 30 so-called unaccompanied minors–young asylum-seekers without parents or guardians.

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